Guaranteed price for September falls 1.00 euro to 36.25 euros

5 September 2011

The lower prices for a number of quoted dairy products have placed some pressure on the prices for raw milk. This explains why the guaranteed price for September falls with 1.00 euro to 36.25 euros per 100 kilograms of milk.

The guaranteed price applies to 100 kilograms of milk with 4.41% fat and 3.47% protein and is exclusive of VAT. The guaranteed prive is the price that FrieslandCampina guarantees to pay the member-dairy farmers for the milk they deliver in the relevant period. This price is independent of the result of the FrieslandCampina company.

FrieslandCampina guaranteed price

2011

2010

Per 100 kilo milk

Cumulative average per 100 kilo milk

Per 100 kilo milk

Cumulative average per 100 kilo milk

January

35.65

35.65

30.00

30.00

February

35.65

35.65

28,50

29,25

March

36.00

35.77

28.00

28.83

April

36.00

35.83

29.25

28.94

May

38.00

36.26

31.50

29.45

June

38.00

36.55

34.25

30.25

July

38.00

36.76

33.75

30.75

August

37.25

36.82

33.75

31.13

September

36.25

36.76

33.75

31.42

October

34.65

31.74

November

35.65

32.10

December

35.65

32.39

Prices in euros per 100 kilograms of milk with 4.41% fat and 3.47% protein, excluding VAT. This price does not include additional charges or payments. Fat price September 2011: 4.54 euros per kilogram, protein price 5.59 euros per kilogram.

This guaranteed price does not include the effects of additional payments and charges, such as the quantum supplement and additional seasonal charges and payments. January, February, July and December are ‘neutral’ months in terms of seasonal levies and supplements: these are months with no seasonal levies or supplements. From March until the end of June the summer levy is applicable to the members of FrieslandCampina (2.30 euros per 100 kilos of milk). The members receive a seasonal supplement of EUR 2.45. After settlement of additional payments and charges, the cash payment in September for a dairy business with 500,000 kilogrammes of milk is 38.49 euros per 100 kilogrammes of milk, exclusive of VAT.

Milk price, guaranteed price and performance paymentThe milk price FrieslandCampina pays its member dairy farmers for the milk they supply consists of the guaranteed price, annual performance payment and the registered reserves (issue of fixed member bonds). The guaranteed price is not linked to FrieslandCampina’s result. We base the guaranteed price on the average milk price for Germany, the milk price of Arla Foods in Denmark, the milk prices of Bel Leerdammer, Cono Kaasmakers and DOC Kaas in the Netherlands and the milk price of Milcobel in Belgium.These are the average annual prices, including payments in arrears and registered reserves. These prices for raw milk are representative for the country concerned. In order to calculate the FrieslandCampina guaranteed price, we weight these milk prices for the volume of milk processed in the entire country in question. In total, this involves about 45 billion kilograms of milk. Each month, the guaranteed price consists of the expected guaranteed price in the relevant month and any settlement of differences in expectations from preceding months.Unlike the guaranteed price, the performance payment and the registered reserves do depend on the financial results of FrieslandCampina and the approved reservation policy. In principle, we will pay 30 per cent of the company’s result for the 2011 financial year to members as a performance payment in cash and 20 per cent will be added to registered reserves in the form of fixed member bonds. Both are paid out annually, after the approval of the company’s financial statements, in proportion to the value of the milk supplied.